Road funding

‘Nigeria is not broke,’ says minister despite telltale signs of bankruptcy

By Jean Ikani

Nigeria’s Minister of Works and Housing, Babatunde Fashola – famous for his exaggerated comments in support of President Muhammadu Buhari’s administration – has claimed that Africa’s most populous country is not broke.

Fashola made the claim yesterday when he appeared on Channels Television’s Sunday Politics program watched by Heritage time (HT) to talk about the state of the nation under the ruling Progressive Congressional APC-led administration.

His comment comes just days after Nigerian Finance Minister Ms. Zainab Ahmed revealed that the country was facing a dire economic crisis as its debt service exceeded retained earnings up to N310 billion in the first four months of 2022.

According to Ms. Ahmed, total federal government revenue for the period was 1.63 trillion naira, while debt service gobbled up 1.94 trillion naira.

This is the first time that the country’s debt service-to-revenue ratio has reached or exceeded 100%.

What Fashola says

Speaker Seun Okinbaloye, the anchor of the chains when he made this remark; “We’re in a debt crisis right now,” Fashola retorted, “Seun, I think you have to understand (sic) with the clip I saw of the finance minister, she didn’t say that we were in crisis debt.

“She was talking about the challenges of funding fuel subsidies, and if it was the same thing that I’ve seen recently, in the public conversation when they were presenting a medium-term expenditure framework or something like that, (sic) the challenges of funding our budget with the continuation of the grant This Nigeria was in a debt crisis (sic) she didn’t say that so don’t import words I don’t remember hearing .

Seun insisted on “I ask again if Nigeria is broke” to which Fashola now replied, “I told you that as far as I know Nigeria is not broke being in debt and being able to repaying your debt in conventional finance is not down.

See the video below.

What you should know

Africa’s most populous country seems to spend more than it earns. Just over $6 trillion of Nigeria’s 2022 budget of N17 trillion is to be debt financed. Ironically, the bulk of budget spending is debt service and other recurring expenses.

Additionally, Nigeria is adding about 3 trillion naira to the budget to fund fuel subsidies, a move that further increases the nation’s debt which is currently servicing the existing debt with over 100% of the debt. revenue generated.

In summary, Nigeria borrows to service existing debt, borrows to finance fuel subsidies, borrows to pay salaries and overheads and, of course, a tiny part to finance infrastructure.

Adding to these dire trends, the value of the naira is plummeting which is not surprising given that the country is not very productive with a large army of unemployed citizens making up 33% while the underprivileged. employees represent 22.8% of the national population.

It goes without saying that Nigeria is in a very difficult financial and economic situation. If the definition of broke (having little or no money) is anything to go by, the country’s economy is in tatters.